The effects of tax burden, company size, and bonus mechanism on transfer pricing

Tax avoidance is an important element of management in the global economy. Managers use tax havens for reducing a company’s effective tax rate. The most common practices in international tax planning can be divided into three groups: loans and their related interest, royalties, and transfer pricing. The aim of this article is to find the determinants of the tax burden faced by foreign-owned subsidiaries. Therefore, a model was created for the tax burden, focusing on the special position of subsidiaries within international tax planning. For this purpose, taxes/outcomes was established as a new dependent variable. The panel data used include Czech companies that are owned by parent companies located in other EU countries. The model distinguishes EU tax havens from regular member states; sector dummy variables are also included. The regression model that was created did not confirm the assumed dependencies. Rather, it indicated other important determinants: profitability, the share of intangible assets, size, and the dummy variable for the ICT sector. Based on the regression results, the independent variables connected with known tax planning schemes have relatively low importance. The significance of these results can be seen in the subsequent conclusions. First of all, there is no difference between the subsidiaries’ tax burdens based on the parent company’s location. Corporations use international tax planning whether or not they are owned from a tax haven. The second significant conclusion indicates the importance of certain sectors and their attributes concerning the tax burden. Companies from the ICT sector are linked to a lower tax burden. On the other hand, the dependencies within the financial sector are not statistically significant. From the perspective of further research, it would be constructive to incorporate the subsidiary’s position within the group.

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Analisis Keputusan Transfer Pricing Berdasarkan Pajak, Tunneling dan Exchange Rate

JURNAL AKUNTANSI DAN PAJAK ◽

10.29040/jap.v20i2.756 ◽

2020 ◽

Vol 20 (2) ◽

Author(s):

Hani Sri Mulyani ◽

Endah Prihartini ◽

Dadang Sudirno

Keyword(s):

Exchange Rate ◽

Exchange Rates ◽

Stock Exchange ◽

Transfer Pricing ◽

Tax Burden ◽

Manufacturing Companies ◽

Pricing Decisions ◽

Pricing Decision ◽

The Government ◽

Positive Effect

Tax has two points of view, for the government tax is a source of state revenue that has the largest contribution, but for tax companies is a burden that must be paid. Often companies do tax planning strategies so that the tax burden that must be borne by the company becomes smaller. Companies usually exploit loopholes from the use of accounting methods allowed by accounting and taxation rules. Transfer Pricing is one of the ways companies take to reduce the tax burden. This study aims to determine and obtain empirical evidence about the effect of tax, tunneling and exchange rates on transfer pricing decisions both partially and simultaneously on manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2013-2017 period. The research method used is descriptive and verification analysis method. The population in this study were 144 manufacturing companies listed on the Indonesia Stock Exchange in the period 2013-2017. Sampling using a purposive sampling method and obtained a sample of 20 companies. The results of this study indicate that partially significant positive effect on transfer pricing decisions, tunneling does not significantly influence the transfer pricing and exchange rate decisions do not significantly influence the transfer pricing decision, but simultaneously the results of this study indicate that taxes, tunneling and exchange rates affect significant to the transfer pricing decision.

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PENGARUH PAJAK, KEPEMILIKAN ASING, BONUS PLAN DAN UKURAN PERUSAHAAN TERHADAP PERUSAHAAN MELAKUKAN TRANSFER PRICING (Studi Empiris pada Perusahaan Manufaktur yang Terdaftar di BEI Tahun 2014-2018)

JURNAL ILMIAH EDUNOMIKA ◽

10.29040/jie.v5i1.1472 ◽

2021 ◽

Vol 5 (1) ◽

pp. 47

Author(s):

Dyah Detari Prabaningrum ◽

Titiek Puji Astuti ◽

Yunus Harjito

Keyword(s):

Stock Exchange ◽

Manufacturing Sector ◽

Transfer Pricing ◽

Foreign Ownership ◽

Company Size ◽

Manufacturing Companies ◽

Panel Data Regression ◽

Data Regression ◽

Bonus Plans ◽

Bonus Plan

This study aims to test empirically the effect of taxes, foreign ownership, bonus plans and company size on transfer pricing in the manufacturing sector listed on the Indonesia Stock Exchange (BEI) for the 2014-2018 period. Based on the purposive sampling method, 33 companies met the criteria to be sampled in the study from 2014-2018. The number of samples in the study for 5 years with 165 observations. This study uses a panel data regression model. Based on the results of data analysis research, it can be concluded that taxes have a positive effect, while foreign ownership, bonus plans, and company size have no effect on transfer pricing in manufacturing companies listed on the Indonesia Stock Exchange in 2014-2018. Keywords: transfer pricing, tax; foreign ownership, the bonus plan, the size of the company

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PENGARUH PAJAK, UKURAN PERUSAHAAN, PROFITABILITAS DAN LEVERAGE TERHADAP KEPUTUSAN PERUSAHAAN UNTUK MELAKUKAN TRANSFER

Jurnal Akuntansi Trisakti ◽

10.25105/jat.v7i2.7454 ◽

2020 ◽

Vol 7 (2) ◽

pp. 247

Author(s):

Helti Cledy ◽

Muhammad Nuryatno Amin

Keyword(s):

Sampling Method ◽

Stock Exchange ◽

Transfer Pricing ◽

Financial Statements ◽

Company Size ◽

Manufacturing Companies ◽

Independent Variables ◽

Practice Transfer ◽

Positive Effect ◽

Observation Period

This study aims to determine the effect of tax, company size, profitability, and leverage on the company's decision to practice transfer pricing. The dependent variable in this study is transfer pricing. Meanwhile, the independent variables used are tax, company size, profitability, and leverage. The study was conducted on manufacturing companies listed on the Indonesia Stock Exchange (IDX) with a purposive sampling method. The sample used was 31 companies with an observation period of 3 years, so as many as 93 samples were obtained. The data of this study were obtained by looking at the company's financial statements in the period 2016-2018. This study used logistic regression analysis with SPSS ProgramThe results showed that tax and profitability had a positive effect on the company's decision to transfer pricing. While company size and leverage variables do not affect the company's decision to transfer pricing

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Determinants of transfer pricing decision at manufacturing companies of Indonesia

International Journal of Research in Business and Social Science (2147-4478) ◽

10.20525/ijrbs.v10i3.1118 ◽

2021 ◽

Vol 10 (3) ◽

pp. 289-302

Author(s):

Supriyati Supriyati ◽

Dewi Murdiawti ◽

Kadek Pranetha Prananjaya

Keyword(s):

Audit Quality ◽

Transfer Pricing ◽

Hypothesis Test ◽

Tax Avoidance ◽

Foreign Ownership ◽

Company Size ◽

Manufacturing Companies ◽

Pricing Decisions ◽

Pricing Decision ◽

Debt Covenant

This paper examines the effect of tax avoidance, bonus mechanism, debt covenant, tunneling incentive, audit quality, multinationality, foreign ownership, and company size on transfer pricing. This research population is all manufacturing companies that list at Indonesia Stock Exchange on the period of 2016-2018 but the collected data are on a period of 2015-2019. The sampling technique uses a purposive method to obtain 275 samples in the observation period of 2016-2018. The method of this research involves descriptive statistic test, classical assumption test, and hypothesis test. A regression test is used for testing the hypotheses. The result of the research shows that tax avoidance, debt covenant, and company size have a significant effect on transfer pricing decision. The factors are multinationality, foreign ownership and audit quality also have a significant effect on transfer pricing decisions. Meanwhile, bonus mechanism and tunneling incentives do not significantly affect transfer pricing decisions. Conclusions from this research is a lot of factors involved in the transfer pricing decision. One from inside the company and the others from an outside company. Transfer pricing is a tool to achieve certain goals. The purpose of transfer pricing can be categorized as internal goals and external goals. The manufacturing companies when deciding about transfer pricing must be careful because there are two perceptive about transfer pricing. One perceptive from a business that transfer pricing is something useful because a company can save money related tax but the other perceptive from the government side, transfer pricing has believed to be able to have reduced or even disappearing potential for a country’s tax revenue.

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Company Size, Profitability, Tax, and Good Corporate Governance On The Company’s Decision To Transfer Pricing (Empirical Study on Manufacturing Companies Listed on the Indonesia Stock Exchange for the 2015-2018 Period)

Riset Akuntansi dan Keuangan Indonesia ◽

10.23917/reaksi.v5i2.12404 ◽

2020 ◽

Vol 5 (2) ◽

pp. 141-150

Author(s):

Atwal Arifin ◽

Africo Al-Dua Saputra ◽

Heppy Purbasari

Keyword(s):

Corporate Governance ◽

Stock Exchange ◽

Transfer Pricing ◽

Secondary Data ◽

Annual Reports ◽

Company Size ◽

Manufacturing Companies ◽

Financial Reports ◽

Good Corporate Governance

The research is aimed to analyze the effect of company size, profitability, tax, and good corporate governance on the company’s decision to transfer pricing. The dependent variable in this study is transfer pricing which is proxied by the value of the related party transaction sale. The independent variables in this study are company size, profitability, tax, and KAP quality. This research used secondary data on financial reports or annual reports on manufacturing companies listed on the Indonesia Stock Exchange for the 2015-2018 period. Determination of the sample employed purposive sampling method. The sample in this study were 22 companies with 88 data. The results in this study found that (1) company size had a positive effect on transfer pricing, (2) profitability had no effect on transfer pricing, (3) tax had no effect on transfer pricing, and (4) KAP quality had no effect on transfer pricing.

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Tax Avoidance and Transfer Pricing

International Journal of Corporate Finance and Accounting ◽

10.4018/ijcfa.2021070103 ◽

2021 ◽

Vol 8 (2) ◽

pp. 28-39

Author(s):

Nikolaos Eriotis ◽

Spyros Missiakoulis ◽

Ioannis Dokas ◽

Marios Tzavaras ◽

Dimitrios Vasiliou

Keyword(s):

Causal Relationship ◽

Transfer Pricing ◽

Tax Avoidance ◽

Multinational Companies ◽

Tax Burden ◽

Tax Havens ◽

The Past ◽

Extensive Analysis ◽

Using Data ◽

International Character

Globalization has led multinational companies, beyond intensifying their competitiveness, to seek ways to maximize profits through tax avoidance. The international character enables them to transfer profits to tax havens or seek transactions that will enable them to avoid, postpone, or pay lower taxes. Although the previous allegations have been hypothesized by researchers, tax audits, and governments, it is difficult to prove due to the chaotic data and the causal relationship between variables. The present study compared the tax burden of 971 multinationals and 1,160 independent companies for the years 2010-2017 in Greece, using data from the Amadeus Tp-Catalyst database and confirmed previous research on significant differences in terms of profits and tax burdens. To the authors' knowledge, there has not been attempted such an extensive analysis for Greece in the past.

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